Who’s monitoring the integrity of your procurement?

Procurement fraud accounts for 16% of the economic crime experienced by South African corporates. Many business leaders are also expecting this to become even more disruptive over the coming 24-months. Continuous monitoring is therefore necessary to help modernise the procurement process and mitigate the risk of fraud.

“The King IV Report and the importance of ongoing governance and compliance are fundamental to ensure the likes of ethical leadership, sustainable development, stakeholder inclusivity, and integrated reporting. Adhering to these tenets is non-negotiable. However, procurement fraud is still a reality facing governments and businesses in South African – and the rest of the world,” says Yolandé Byrd, Director at FACTS Consulting, a local SAS partner.

This is where SAS Continuous Monitoring for Procurement Integrity becomes critical. Such solutions help to uncover procurement risks earlier than before, prevent financial losses, and protect the organisation’s reputation. Continuous monitoring relies on automated analytics to rapidly identify risks and errors in data. Using predefined fraud scenarios, in combination with data management, proven models, and rules, continuous monitoring can uncover unusual employee or supplier behaviour, duplicate invoices, collusion, and more.

“Invoice practices and contract bid rigging are two of the most common types of fraud globally. And while the finance department is often held accountable for these losses, other groups share responsibility. For their part, human resources can play an active role in proactive risk reduction efforts. Legal and compliance teams need to take responsibility for due diligence that must include both the onboarding and periodic review of existing suppliers,” says Andrew Sangweni, Business Solutions Manager, Fraud & Financial Crime, ‎SAS in South Africa.

No organisation, regardless of the industry sector, is immune to this. This becomes especially prevalent during procurement cycles. Unfortunately, traditional fraud approaches are reactive, only discovering instances after the damage has been done.

“Continuous monitoring reinvents this and empowers organisations to accelerate fraud detection and free up internal resources to focus on other strategic imperatives. It employs sophisticated data quality technologies to automatically create a single view of a person or an entity. Furthermore, it enables the rapid identification of high-risk events that warrant further investigation before it is too late,” says Byrd.

Beyond hiring, auditing, and procurement practices, detection technologies used on a regular basis make the biggest impact in defending against fraud, waste, and abuse. However, more work needs to be done to educate leaders on the importance of this for it to become a priority. Employing continuous monitoring injects a level of integrity into the procure-to-pay lifecycle previously not possible. It places rigorous, ongoing monitoring and controls throughout the process to look for signs of errors, waste, and fraud.

“It centres on analysing data in real-time to identify anomalies human investigators might overlook. And because this is automated and can function at scale, continuous monitoring is more cost-effective than employing teams of fraud investigators,” adds Sangweni.

The SAS Continuous Monitoring for Procurement Integrity solution includes a procurement analytics data model, procurement-specific scenarios, and a large set of predefined rules based on decades of procurement forensics experience. It uses a risk scoring engine that automatically applies a combination of business rules, anomaly detection, predictive modelling, and associative link analysis at entity and network levels.

“Given the rapidly evolving compliance environment, and with the Protection of Personal Information Act (POPI) due to be fully enforced from the end of June 2021, continuous monitoring will become a strategic deliverable for organisations to maintain their adherence to the regulatory framework. As responsible corporate citizens, government departments and businesses, alike, must do everything in their power to safeguard not only data, but also to protect themselves against the scourge of procurement fraud,” concludes Byrd.

SAS is a provider of analytics solutions. Through innovative software and services, SAS empowers and inspires customers around the world to transform data into intelligence.


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